A Pagan's Blog

A Pagan's Blog

The Case for the Corporate Death Penalty

This was a response to  comment on the immediately preceding post.  It suggests a practical way of bringing corporations under the law without depending on corrupt politicians who have been bought off.  The recent actions by Massey Energy, Goldman Sachs, and Wellpoint suggest remedial measures are long overdue.

Corporations are institutionally incapable of acting
ethically.  They will only do so
when the penalty for being caught breaking the law is greater than any likely
profit from doing so.  The recent
cases of Massey Energy, Goldman Sachs, and now Wellpoint demonstrate this sad


In addition, their wealth and power make elected officials
unlikely allies against them except for the short term – and than, as the
Republicans and too many Democrats demonstrate, they will do what they can to
appear on the people’s side while loyally serving their real paymasters. Nor is
corporate media an ally.

Corporations have become a new aristocracy, largely above
the law, which they simply buy off or pay relatively painless fines.  Unlike the old aristocracy, neither
decency nor generosity amount for much because should any CEO so act, it will
be at the cost of profit and of share value, and they will risk being ousted in
a take over bid.  Such positions of
leaders attract sociopaths who will use the perks of leadership primarily to
feather their own nests.


In other words, we have created and sustained institutional
sociopaths morally worse than the old aristocracy, organizations that will
actually penalize decent people acting decently if it costs them profit.  The only likely exceptions will be the
first generation of founders, if they have a strong ethical vision.   

The alternative to relying on
politicians, and a reasonable one, is the “Corporate Death Penalty.”

If a corporation breaks the law
three times within 20 years, using the same logic conservatives love to employ
with real people, the company has its assets sold to the highest bidder with
the money going first to pay for damages, second, to pay for the sustenance and
retraining of its wag employees, and if any remains, to pay off public debt.  If a national law is its third strike,
it goes to reduce the national debt. 
If a state law, it reduces the state debt. Shareholders get
nothing.  Their shares’ value falls
to zero.


Top management is prohibited from
ever working together, to destroy the culture of corruption they created and
sustained.  The firm’s name is
abolished for a generation.  It is
as dead as a company can be.

The penalty is so draconian that
with a second conviction share prices will suffer seriously.  This in itself will virtually guarantee
that top management will be ousted as a preventive measure, and very strict
rules enforced vis-à-vis the law. 
Even a first conviction will raise questions about the competence of top
management, and may cost them their positions. 


This environment will hopefully
push back against the advantages sociopaths currently possess in rising to
leadership positions.  If it fails
to do so, at least it will help keep them under control, or eliminate them from
top positions.

The logic of the corporate death
penalty is to create such circumstances that it will almost never need to be
employed.  One ‘execution’ should
do the job because top management will then rigorously self-police because they
stand to lose a great deal with even a second conviction.  And if they do not, shareholders will.
The profit orientation of the market will then work to improve behavior rather
than as it does now, to encourage corruption.

Comments read comments(15)
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posted April 22, 2010 at 11:23 pm

I think the root problem is the way in which corporations have been held to be legal “persons” at all. The Supreme Court has decided cases in which corporations were considered as having “rights” just as real persons do–this is why, for example, it’s hard to restrict corporate spending in political campaigns, since to do so would restrict their freedom of speech. Logically, a corporation isn’t a person, so such rules shouldn’t apply–but that’s what the Constitutional jurisprudence has it as being now. To do so would probably require a Constitutional amdendment, but the best solution would be to end the “personhood” of corporations altogether.
Since doing that would be well-nigh impossible, I’m in complete agreement with Gus in this post as being the next best solution. String ’em up, so to speak, if the situation calls for it!

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posted April 23, 2010 at 2:21 am

I’m not acquainted with U.S. law, but I would suspect that, in most jurisdictions, rescission of an insurance contract, even if done in bad faith, would not be a criminal offence, but, rather, a matter for civil litigation between the insured and the insurer. So, how about the following:
1 An insurer who is found to have rescinded an insurance policy in bad faith will be required not only to restore the required coverage, but also to pay punitive damages to the insured in the amount of 1/365 of its reported pre-tax income for the previous year; and
2 This amount will not be an allowable expense for tax purposes.
In other words, an insurance company that engages in this type of shenanigans will wind up paying the policyholder one day’s pre-tax profit, and they won’t be able to offload half of that cost onto the taxpayers.
I would think that this would be sufficient to deter insurance companies from rescinding policies except in the clearest possible cases of premeditated fraud. Two such penalties, or even one, would be enough to trigger a shareholder revolt. Furthermore, because it’s a civil case and not criminal, the insured only has to prove his/her case against the company on preponderance of evidence. In a criminal case, guilt has to be proven beyond reasonable doubt, which is a much higher standard.

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gus diZerega

posted April 23, 2010 at 11:01 am

I like it.

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posted April 23, 2010 at 12:08 pm

Sorry for the OT posting, but I don’t know your personal email.
I teach a Paganism 101 class and I have my students listen to a lecture you gave in Toronto in 2007 (“Return of the Divine Feminine”). In that lecture, you tell the story about Stewart Alsop and his experience in a Chinese hospital.
I’ve searched the Internet for this story and I haven’t been able to find it. Would you happen to know where I could find a reference to this story?

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posted April 23, 2010 at 12:29 pm

Too often, those who fear the power of the state pay no attention to the power of corporations.
Penalties on the misbehavior of corporations do need to take into account their unique form of “personhood.” To the exhent they are persons made of money and influence, that’s what has to be used in punishment/rehabilitation. No money. No influence.
I find that I’m less bothered by draconian regulation of corporations than I imagined I’d be.

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Gus diZerega

posted April 23, 2010 at 12:35 pm

Hi Hobbes-
It was many years ago- when Nixon went and Alsop (Stewart or Joseph- I don’t remember, but it seems to be Stewart) got appendicitis and wrote a piece about watching it being removed via a mirror the docs gave him. That’s all I remember – that and the reaction of the head of Yale’s med school.
I just googled around and found another mention of what I remember here
This article gives some details I do not remember, but there is no mention of the head of Yale’s med school saying it couldn’t be true because their theories told them pain did not work that way.- so we likely are remembering the same column.
The Univ. of Maryland Medical Center discusses acupuncture in a way that fits Alsop’s report, but does not mention him. (scroll down the article)
I think it was roo far back to be in Google. If you can find a copy of Alsop’s columns (not his Saturday Evening Post pieces) and look around the time he accompanied Nixon to China, you’ll find it.

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posted April 23, 2010 at 12:46 pm

Thanks very much Gus!

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Cheryl Hill

posted April 23, 2010 at 2:45 pm

I’m still saddened, frustrated and a bunch of other emotions I can’t quite nail down beause I know that the only way the people controlling corporations can be assured of acting ethically is to make it unbearably painful to do wrong. One would hope corporations would do this without having to be on a choke chain.

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posted April 23, 2010 at 5:50 pm

Brilliant idea Gus. Implementation will be tricky, given that the corporations essentially own our public officials outright, but the right wave of intelligent, populists anger might just do it….

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posted July 25, 2014 at 6:57 pm

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